Beneficial ownership - does it transfer with property sale?

[Whojamaflip]

A friend sold some property which had beneficial ownership of a section of garden but the legal title remained with my dm.

There was a specific signed long standing legal agreement with the named friend and dm allowing use of the garden but nothing was mentioned when the property was sold.

Now the new owners are asking that the title is transferred to them as they want to build a workshop on it and that they have beneficial ownership of the land, therefore dm has no grounds to deny them building there.

Dm has offered to sell them the legal title at market value but the new neighbour has stated they aren't prepared to pay anything more than a couple of hundred for it (it has been valued in the region of £20,000 by an estate agent)

Any ideas where we stand? Has dm lost any rights to the land when it was sold? What do we do now? Or are the new neighbours being cheeky and dm can serve notice for them to quit the land?

The land doesn't own the beneficial interest. The friend will have owned it.

Will either have been personal to the friend, or a true beneficial interest in land. If the former it can't be transferred. If the latter it can be. Your mother needs to take a copy of the agreement to a solicitor for some advice.

£20,000 for part of a garden!!??

Definitely go to a solicitor for advice. Splitting legal and beneficial ownership in land is a nightmare! (Though depending on how the contract was drafted, it may be that all that was granted was a right to use the garden, not actual beneficial ownership. Presumably solicitors were used for the original contract?)

The original contract was drawn up by solicitors and appears to be only between dm and the original friend. It was so that the friend had sole use of the land for her enjoyment but it stated that ownership title was to remain with dm. Dm has health issues so the garden had become to much for her to cope with and friend wanted a veggie patch.

This is the first we've even heard of beneficial ownership What exactly does it mean google no bloody use

Would the friend be able to include the right of use in the sale of the property when it was sold or is it a case that she has tried to pass on the benefit fraudulently? (strong word I know but couldn't think of any other way to put it.

Red the piece of land adds another 50% onto the garden of the neighbours and so it was valued according to the increase in value it would put on the house iyswim.

If they had the use of the land without your mother's permission, for more than 10 or 12 years there might have been a case for adverse possession (basically squatters rights - though the law changed a few years ago and made it harder to claim adverse possession - don't ask me to explain any more as I don't know). However your friend had access to the land with your mother's permission. There is absolutely no question of adverse possession.

Your mother should protect her interest in the land now by fencing it off.

Thanks Collaborate thats what we were most afraid of - that the neighbour would be able to claim the land for themselves.

We are off to see the solicitor next week so will see what comes of that.

Dm is reluctant to fence the land off before then as she doesn't want to inflame the situation.

Another question - are house purchase contracts available to the general public? Could we get a copy of what was signed when the friend sold?

They are private. Transfer deeds are similar, in that you need a very good reason, and a connection with the land's ownership, to get a copy.

The law makes a distinction between the legal and beneficial owners of land. A legal owner is the person entitled to have their name on the title deeds or land register, they are the persons entitled to deal with the land ie sell it transfer it etc. A beneficial owner is the person entitled to the proceeds of sale. If your mother is legal owner but not the beneficial owner then she holds the land on trust for the beneficial owner. If your mother is both the legal and beneficial owner then the land is hers to do with as she wishes subject to any leases or other interests granted.

On the facts it seems unlikely that your mother will have transferred the beneficial interest to the previous owners, your solicitor will be able to check.

If your mother had granted a lease to the previous owners then it may be that they have assigned the lease to the new owners. This would give the new owners the right to use the land in accordance with the lease terms. In my experience it is usual for a lease of this nature to prohibit assignment, but your solicitor can check this.

Obviously you need full legal advice. However just to point out that adverse possession is hard to achieve, you have to have in effect claimed the land as your own so if its been used on the back of a formal or informal arrangement with your mother then it will not be able to be claimed. It is possible for anybody to obtain any documentation registered with the land registry. A contract will not be registered but a transfer might. You don't need to show any connection or reason.

I'm a property lawyer btw

Could it be a licence rather than a lease lawabiding in which case wouldn't it be personal to the orginal parties?

Nice one mama - I lawyer too but only tech stuff!

Yes freddie I agree it could be, when I read the OP I did consider this particularly as the OP says about the agreement 'allowing use' of the garden but the OP later mentions 'sole use' which may mean exclusive possession. It will depend on the facts as to whether there is a licence or a lease. If it is a licence it will be contractual rather than creating an interest in land but it is interesting that the neighbours believe they have some entitlement to use the garden. I would have expected this to be looked into by their conveyancer prior to their purchase and i do wonder where this belief can have originated? But like the OP says perhaps they are aware they have no entitlement but are chancers if you like.

What does the document say? As people say above it needs to be looked at to see if it just gave some kind of right to use or something more.

Also check if the neighbours have registered at the Land Registry any kind of right over the property in a similar way to what married couples often do when they are not on the deeds.

It sounds like they are claiming rights because of the document, not because of long standing use (which I think is called adverse possession). I looked this up below because I knew the law was changed a while ago to make it harder to acquire these rights:
On adverse possession - wiki

"The position of a registered landowner was significantly improved by the Land Registration Act of 2002. Where land is registered, the adverse possessor may apply to be registered as owner after 10 years[14] of adverse possession and the Land Registry must give notice to the true owner of this application.[15] This gives the landowner a statutory period of time [65 business days] to object to the adverse possession, and if they do so the application fails. Otherwise, the squatter becomes the registered properietor according to the land registry. If the true owner is unable to evict the squatter in the two years following the first application, the squatter can apply again after this period and be successful despite the opposition of the owner. The process effectively prevents the removal of a landowner's right to property without his knowledge, while ensuring squatters have a fair way of exercising their rights."